THE AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL
EMPLOYEES,
AFL-CIO, DISTRICT COUNCIL 48, AMERICAN FEDERATION OF STATE,
COUNTY AND MUNICIPAL EMPLOYEES, AFL-CIO, JOHN PARR, Director of
District Council 48, LOCAL 1053, AMERICAN FEDERATION OF STATE,

COUNTY AND MUNICIPAL EMPLOYEES, AFL-CIO, MARGARET SILKEY, as
President of Local 1053, FLORENCE TEFELSKE, as Treasurer of Local
1053, LOCAL 594, AFSCME, affiliated with District Council 48,
LOCAL 645, AFSCME, LOCAL 882, AFSCME, LOCAL 1055, AFSCME, LOCAL
1654, AFSCME, LOCAL 1656, AFSCME, all- affiliated with District
Council 48,

Petitioners-Appellants,

vs.

WISCONSIN EMPLOYMENT RELATIONS COMMISSION,

Respondent.

No. 89-1094

Decision No. 18408-H and 19545-H

CERTIFICATION

Before Moser, P.J., Sullivan and Fine, JJ.

Pursuant to sec. 809.61, Stats., this court certifies this appeal
to the Wisconsin Supreme Court for its review and determination.

This consolidated appeal seeks review of a judgment of the circuit
court on a petition for review under ch. 227, Stats., affirming a
final decision of the Wisconsin Employment Relations Commission
regarding constitutional and statutory claims arising out of "fair-share" agreements.

ISSUES

This appeal presents significant policy matters of first impression
in Wisconsin encompassed in the following 12 issues.

(1) Whether the courts are required to give deference to the
Wisconsin Employment Relations Commission's determinations
concerning the purposes for which union fairshare fees may be
lawfully collected, the procedures prerequisite to collection of
those fees, and the appropriate remedies if those fees are
unlawfully collected.

(3) Whether the WERC acted beyond its authority by ordering
100% escrow of all fair-share fees deducted from all fair-share
payors, including those employees who did not challenge the fair-share deductions.

(4) Whether a union is entitled to retain compulsory fair-share fees from nonunion
employees, unless there has been full
compliance with Hudson's procedural safeguards.

(5) Whether the WERC properly vacated the arbitration award
based on "technical defects" in the unions' notice and procedures
where the suing nonunion employees were ordered "challengers" as a
matter of law under the unions' procedures, and where the suing
nonunion employees refused to participate in the arbitration.

(6) Whether the WERC's order requiring verification by an
independent auditor of the local unions' expenditures, and its
rejection of a "local presumption" in the absence of an audit, is
consistent with Hudson's requirement that there be financial
disclosure of the unions' expenditures.

(7) Whether nonunion employees of a public employer can be
compelled to pay for publicity directed at the public instead of
the bargaining unit, organizing efforts, representation of other
bargaining units, as well as general lobbying and litigation
expenses.

(8) Whether nonunion employees must affirmatively object to
the unions' expenditures before sec. 111.70(1)(f)'s "proportionate
share" limitation can be applied.

(9) Whether the WERC properly held four features of the
unions' procedures to be constitutional where the WERC found that:
1) the breakdown of the unions' expenses as chargeable or non-chargeable was not verified
by an independent auditor; 2) the
American Federation of State, County and Municipal Employees
(AFSCME) International's financial disclosures were
constitutionally sufficient; 3) it was reasonable to require that
nonunion employees be charged a fee equal to full union dues unless
the nonunion employee objects annually, within 30 days after the
date of the notice; and 4) that the arbitration process is limited
to those employees who take formal steps to "challenge" the unions'
fair-share assessments.

(10) Whether an employer commits a prohibited practice under
the Municipal Employment Relations Act, and violates the First
Amendment rights of its nonunion employees, if it does not ensure
or establish adequate fair-share procedures before it deducts union
dues from the wages of the nonunion employees.

(11) Whether the WERC properly found that the District
Council 48's account was not a "true escrow" because it was not
independently controlled by neutral third parties.

(12) Whether, in the absence of full compliance with Hudson's
procedural safeguards, restitution and a cease-and-desist order is
the appropriate remedy rather than escrow of the fair-share fees.

RELEVANT STATUTE

111.70 Municipal employment.

. . . .

(2) RIGHTS OF MUNICIPAL EMPLOYES. Municipal
employes shall
have the right of self-organization, and the right to form, join or
assist labor organizations, to bargain collectively through
representatives of their own choosing, and to engage in lawful,
concerted activities for the purpose of collective bargaining or
other mutual aid or protection, and such employes shall have the
right to refrain from any and all such activities except that
employes may be required to pay dues in the manner provided in a
fair-share agreement ....

111.70 Municipal employment. (1) DEFINITIONS.

. . . .

(f) "Fair-share agreement" means an agreement between a
municipal employer and a labor organization under which all or any
of the employes in the collective bargaining unit are required to
pay their proportionate share of the cost of the collective
bargaining process and contract administration measured by the
amount of dues uniformly required of all members. Such an
agreement shall contain a provision requiring the employer to
deduct the amount of dues as certified by the labor organization
from the earnings of the employes affected by said agreement and to
pay the amount so deducted to the labor organization.

FACTS

In the early 1970's, the Milwaukee Board of School Directors and
Milwaukee County entered into fair-share agreements with the
Milwaukee District Council 48 of the American Federation of State,
County and Municipal Employees and its affiliated locals that
required all nonunion employees to make a monthly payment to the
unions for the cost of collective bargaining and contract
administration. This fair-share fee was equal to the dues paid by
union members. Subsequently, the nonunion employees filed two
separate actions challenging the constitutionality of sec.
111.70(1)(f) [formerly (h) under the 1972-73 statutes] and (2),
Stats., which permits the collection of fair-share fees from
nonunion employees. (1)

In 1978, the Wisconsin Supreme Court held that sec. 111.70 was
constitutional. (2) The cases were remanded to
the WERC to make
findings of fact and conclusions of law, and to determine how much
of the fair-share fees had been used for purposes unrelated to
collective bargaining or contract administration.

In April, 1986, the nonunion employees requested the WERC to review
the fair-share agreements in light of Chicago Teachers Union v.
Hudson, 475 U.S. 292 (1986), in which the United States Supreme
Court announced constitutionally-required procedural safeguards
for the collection of fair-share fees. The Supreme Court declared:

[T]he constitutional requirements for the Union's collection of
agency fees include an adequate explanation of the basis for the
fee, a reasonably prompt opportunity to challenge the amount of the
fee before an impartial decisionmaker, and an escrow for the
amounts reasonably in dispute while such challenges are pending.

Hudson, 475 U.S. at 310. Pursuant to Hudson, the
unions published
a "NOTICE TO ALL NONMEMBER FAIRSHARE PAYORS," to provide nonunion
employees the opportunity to assess the basis for the fee, and to
give them the opportunity to object or to challenge the feels
calculation.

On May 19, 1986, the WERC consolidated Browne and
Johnson. After
an arbitration hearing, the WERC determined, among other things,
that the unions committed prohibited practices under sec.
111.70(3)(b), Stats., by providing only some of the procedural
safeguards announced in Hudson.

The WERC ordered, inter alia, that: (1) the unions refund, at a
seven percent interest rate, to the complainants, at percentages
established in the various stipulations, the fair-share fees paid
from the time the complainants became subject to the fair-share
deductions; (2) the unions escrow an amount equal to the fair-share
fees deducted from January 1, 1983, through March 4, 1986, with
seven percent annual interest from the date the fees were taken
until the date when the fees were placed in escrow; (3) the unions
rectify the deficiencies in the fair-share procedures to comply
with Hudson; (4) the unions continue to rebate in advance non-chargeable
sums for both objectors and challengers, and escrow in
an interest-bearing account any and all fair-share fees deducted
from all fair-share fee payors from the date of the Hudson
decision, plus seven percent annual interest, until the WERC finds
that the unions are capable of providing adequate notice to all
fair-share fee payors in the bargaining unit and have established
proper procedures.

The unions and nonunion employees appealed. The circuit court
upheld the WERC's decision. Both parties appeal the circuit
court's affirmance of the WERC's decision.

DISCUSSION

I. Standard of Review. The circuit court denied the nonunion
employees' request for de novo review of the WERC's decision. The
court stated: "The facts are not in dispute. Therefore, the issue
is whether the WERC erred in applying the law." The circuit
court noted that a reviewing court will sustain the WERC's
conclusions of law if they are reasonable, and "will defer to the
administrative agency's special expertise in the construction and
interpretation of a given law" even when "the questions raised are
of issues of first impression."

The nonunion employees argue no deference should be given to the
WERC's conclusions concerning the purposes for which fair-share
fees may lawfully be collected, the procedures requisite to
collection, and the appropriate remedies for unlawful collection,
because these matters involve statutory and federal constitutional
issues of first impression. They point out that the WERC's
expertise lies in the area of labor-management relations and not
First Amendment rights, and urge de novo judicial review.

The WERC states in rebuttal that "the issue of whether or not the
subject of this dispute is one of 'first impression' is debatable,"
and argues that reviewing courts should defer to its decision
because of its "substantial expertise" in fair-share agreements,
and its "more generalized expertise in the fields of public sector
collective bargaining and statutory application." The unions
did not address this issue.

II. Retroactivity of Hudson. The WERC and the circuit
court retroactively applied the procedural safeguards announced in
Hudson to the fair-share agreements in dispute.

Questions involving retroactivity are resolved by application of
the three-part analysis set forth in Chevron Oil Co. v. Huson, 404
U.S. 97 (1971).

First, the decision to be applied nonretroactively must
establish a new principle of law, either by overruling clear past
precedent on which litigants may have relied or by deciding an
issue of first impression whose resolution was not clearly
foreshadowed. Second, it has been stressed that "we must ... weigh
the merits and demerits in each case by looking to the prior
history of the rule in question, its purpose and effect, and
whether retrospective operation will further or retard its
operation." Finally, we have weighed the inequity imposed by
retroactive application, for "[w]here a decision of this Court
could produce substantial inequitable results if applied
retroactively, there is ample basis in our cases for avoiding the
'injustice or hardship' by a holding of nonretroactivity."

The WERC argues its retroactive application of Hudson's
constitutionally required fair-share procedures is entitled to
substantial judicial deference as an administrative act of
statutory interpretation and policymaking, and should be affirmed.
WERC also argues its order retroactively applying Hudson should be
affirmed as a proper interpretation of federal legal doctrine
involving the application of recent case law. The WERC contends
Hudson does not satisfy the "first impression" criterion discussed
in Chevron because Hudson merely refined what was
required to
protect the constitutional rights of fair-share employees.

III. WERC's "Jurisdiction" to Order 100% Escrow of Fair-Share Fees
Paid by All Nonunion Members. The WERC ordered the unions to
escrow all fair-share fees deducted from all fair-share payors in
the bargaining units represented by the unions, including those
employees who did not challenge the fair-share fees, until the WERC
determined that the unions were prepared to provide adequate notice
to all fair-share payors and established proper fair-share
procedures.

The unions argue that the WERC acted beyond its "jurisdiction" by
creating a "class" consisting of all nonunion-member fee payors,
and not just those who challenged the deductions. The unions
further contend that this "defacto certification" is outside the
WERC's jurisdiction because the circuit court certified only a
limited class in Browne, and denied certification in Johnson.
The unions also argue the WERC acted beyond its power and contrary
to law by expanding the class authorized by the circuit court in
Browne, and by affording relief to non-parties. Additionally, the
unions argue that the 100% grant of relief to all fair-share payors
ignores a potential conflict of interest within the "class" between
nonunion employees who are hostile to unionism on political and
ideological grounds, and those employees who are not hostile toward
unions but just do not want to pay more than their "fair-share."
See Gilpin v. AFSCME, 875 F.2d 1310, 1313 (7th Cir. 1989), cert.
denied, 110 S. Ct. 278.

The WERC argues that, in the absence of a specific statute that
applies judicial class action procedures to the WERC, the WERC is
given substantial powers to remedy situations where prohibited
practices have taken place.

The nonunion employees argue the WERC has authority to order relief
for employees who are not parties in a proceeding when their
statutory rights have been violated. They contend that escrow is
a form of injunctive relief, and that the scope of injunctive
relief is dictated by the extent of the violation and not by the
plaintiff class, and thus can benefit those employees who did not
sue.

IV. 100% Escrow as a Deprivation of Fair-Share Fees Unions
Entitled to Retain. The unions argue that the WERC's order
requiring 100% escrow of all fair-share fees denies them monies
they are entitled to retain as compensation for the statutorily-mandated chargeable services
they are required to provide to all
members of the bargaining unit, including nonunion members. The
unions argue that relief should have been confined to only those
fair-share payors who affirmatively challenged the unions'
expenditures of their fair-share fees. The unions, quoting Hudson,
argue the WERC's order requiring 100% escrow is inconsistent with
the objective of "'preventing compulsory subsidization of
ideological activity by employees who object thereto without
restricting the Union's ability to require every employee to
contribute to the cost of [chargeable] activities.'" Id., 475 U.S.
at 302, (emphasis added) (quoting Abood v. Detroit Bd. of Educ.,
431 U.S. 209, 237 [1977]).

The WERC argues that while the unions are entitled to receive fair-share fees from
nonunion employees for the costs of collective
bargaining, they "'should not be permitted to exact a service fee
from nonmembers without first establishing a procedure which will
avoid the risk that their funds will be used, even temporarily, to
finance ideological activities unrelated to collective
bargaining.'" Id., 475 U.S. at 305, (emphasis added) (quoting
Abood, 431 U.S. at 244 [Stevens, J., concurring]). The WERC
contends that absent review of the unions' expenditures by an
independent auditor, 100% escrow is required. See Hudson at 310
& n.23.

The nonunion employees argue that the unions are not entitled to
retain any of the fair-share fees because the unions failed to have
constitutionally adequate procedures in place prior to the
deductions. The employees further contend that 100% escrow is
proper since the union violates the rights of all nonunion fair-share payors, and not just those
who sued, when any of Hudson's
constitutionally-required safeguards are absent.

V. Vacation of Arbitration Based on "Technical Defects" in the
Unions' Procedures and Notice, and the Challengers' Failure to
Participate in the Arbitration. The WERC vacated the earlier
arbitration award and ordered that a new arbitration be held, in
part, due to "technical defects" in the unions' notice and
procedures. Although the WERC found that the AFSCME International
and District Council 48 (but not the local affiliate) had provided
sufficient financial information to permit fair-share payors to
assert a claim, the WERC ordered that all of the members of the
Browne class and all of the complainants in the Johnson case
were
to be treated as "objectors and challengers." The WERC ruled that
the notice was unclear as to the consequences of "objecting" rather
than "challenging," and that the notice imposed various
"unwarranted obstacles," such as the $5.00 filing fee and certified
mail requirement. No objectors or challengers participated in the
arbitration hearing.

The unions argue that because the complaining nonunion employees
were ordered "objectors and challengers" as a matter of law, the
nonunion employees could not be prejudiced by the defects in the
unions' objection procedures or notice. They argue that none of
the "technical defects" could have confused or detracted from the
nonunion members' ability to challenge the accuracy of the fair-share fees before an impartial
decision-maker. The unions also
argue that the new arbitration should have been ordered only if the
arbitration process itself was defective. Additionally, the unions
claim that the complainants are estopped from challenging the
arbitration by their refusal to participate in the arbitration.

The nonunion employees argue that, in Hudson, the Supreme Court
implicitly held that the failure to use the union's objection
procedure does not estop employees from obtaining relief where the
rights of all plaintiffs, including potential objectors, were
violated. See id., 475 U.S. 296-7, 304-11 & n.22;
Hudson, 743 F.2d
1187, 1194 (7th Cir. 1984). They claim that they did not
participate in the arbitration because of procedural defects, and
therefore the arbitration was "ex parte" and not an "adversary"
proceeding.

The WERC argues that ineffective participation in the arbitration
process, because of constitutionally defective notice, taints the
entire arbitration process. Thus, it submits, the non-union
employees should not be held to the results of an arbitration
process that was defective from the start.

VI. Verification of Local Union Expenditures by Independent
Auditor and the "Local Presumption." The unions' notice did not
contain specific financial data for the local unions'
disbursements. The notice stated: "Council 48 has determined that
the percentage of chargeable activities of these local unions is at
least as great as the percentage of chargeable activities of
Council 48." Although the WERC determined that the financial
information in the notice for the AFSCME International and District
Council 48 met the Hudson requirements, the WERC ordered the local
unions to have their financial information audited by an
independent auditor. The WERC also stated that it would accept a
presumption that the chargeable expenses of the local unions is at
least as great as District Council 48, provided an independent
auditor were to take a random sampling of a representative number
of the local unions and audit their records, and if such sampling
established to the auditor's satisfaction that the local
expenditures always had a lesser percentage of non-chargeable
expenses.

The unions argue that requiring verification of the expenses of
each local union by an independent auditor is burdensome and
unnecessary. The unions argue that the Supreme Court did not
require "absolute precision" in financial disclosures. See Hudson,
475 U.S. at 307 n.18. They further assert that Hudson held that
the unions were not required to provide nonunion employees with an
"exhaustive and detailed list of all its expenditures" and that
disclosure of "major categories of expenditures" is adequate. See
ibid.

The WERC argues that inconvenience is not a valid ground for
avoiding constitutionally-required procedures. The WERC further
asserts that requiring a verified audit of the local unions'
expenditures is within the WERC's broad remedial authority, and is
consistent with constitutional doctrine.

The nonunion employees argue that Hudson requires the "burden of
objection," id., 475 U.S. at 309, be minimized, but that the burden
here would be increased because, without financial information
about local union expenditures, the potential objectors will lack
a basis from which to determine whether they should challenge the
chargeable fees. They also argue that the calculation of the fee
must not only be disclosed, but must also be "appropriately
justified" and "narrowly drawn" to minimize the impingement on
nonunion employees' First Amendment rights. Finally, the nonunion
employees argue that the WERC and circuit court correctly rejected
use of the local presumption because, in reviewing the local
unions' actual expenditure, eleven of thirteen locals had smaller
percentages of chargeable expenditures than District Council 48.

VII. Chargeability of Various Union Activities. In
Abood, 431
U.S. 209, the United States Supreme Court upheld the
constitutionality of an agency shop agreement between a
municipality and a teacher's union that required every employee in
the bargaining unit to pay a "fair-share" fee to defray the costs
of collective bargaining, contract administration, and grievance
adjustment. The Supreme Court also stated that a union could not
collect fees from dissenting employees for any expenditures not
germane to the union's duties as exclusive bargaining
representatives. Id. 431 U.S. at 234-236.

The nonunion employees argue that the WERC and circuit court erred
in concluding that expenditures for public advertising, organizing
efforts, representation of other bargaining units, general lobbying
and litigation expenses not incident to the nonunion employees'
bargaining unit were properly chargeable as a fair-share expense.

A. Public Advertising. The nonunion employees admit that coerced
support of information directed to their bargaining units is a
chargeable fair-share expense, but argue that advertising aimed at
the public "is speech on matters of public concern" and does not
relate to collective bargaining or contract administration.

B. Organizing. The circuit court sustained the WERC's holding
that organizing in the nonmembers' units, organizing in and seeking
recognition as bargaining agent for other units, including units
where another union is already certified, and defending against
decertification or displacement efforts, can all be charged to the
nonunion employees because, as the circuit court concluded,
organizing "increases the union's overall size and therefore,
enhances the union's ability to be more effective and provide
better services on behalf of all employees." (Emphasis in
original). The nonunion employees argue that in Ellis v. Railway
Clerks, 466 U.S. 435 (1984), the United States Supreme Court
rejected the theory that organizing should be chargeable because "a
stronger union ... would be more successful at the bargaining
table." See id., 466 U.S. at 451.

C. Exclusive Representation of Other Bargaining Units. The WERC
and circuit court concluded that nonunion members could be charged
costs of representing other units. The nonunion employees contest
the "ultimate benefit" rationale, and argue that the only benefits
that justify fair-share fee compulsion are those the bargaining
unit's exclusive agent must, pursuant to statutory mandate, perform
on behalf of "'all employees ..., union and nonunion,, within the
relevant unit" and that "necessarily accrue to all employees."
Abood, 431 U.S. at 221-22 (emphasis added) (quoting International
Ass'n of Machinists v. Street, 367 U.S. 740, 761 [1961]).

D. Lobbying. The WERC and the circuit court ruled that lobbying
"for collective bargaining legislation or regulations or to effect
changes therein" or "for legislation or regulations affecting
wages, hours and working conditions of employees generally before
Congress, state legislatures, and state and federal agencies" is a
chargeable fair-share assessment. The nonunion employees reply
that in bargaining and contract administration, the exclusive
bargaining representative deals with the employer regarding the
terms and conditions of employment that are within the employer's
control. They argue that lobbying is primarily a political
activity directed to the legislature, other governmental agency, or
the public, on matters of public concern not within an employer's
control. They assert the coerced subsidization of lobbying lacks
statutory basis and constitutes a substantial interference with the
First Amendment rights of nonunion workers.

E. Litigation. The WERC and circuit court ruled that AFL-CIO
jurisdiction dispute proceedings, impasse mechanisms, and
litigation "relating to concerted activity and collective
bargaining" are chargeable, even if the nonmembers' units are not
involved. The nonunion employees assert that this is contrary to
Ellis, which held that nonunion members can only be charged for
litigation, including "jurisdictional disputes with other unions,
... that concerns bargaining unit employees and is normally
conducted by the exclusive representative." Ellis, 466 U.S. at
453. They argue that unless the bargaining unit is directly
concerned, objecting employees need not share the costs of union
litigation. See ibid.

The WERC argues that, Abood and Hudson are the
only Supreme Court
decisions to deal with public sector labor relations and neither
decision clearly defines exactly what constitutes a chargeable
expense. The WERC contends that a substantial dichotomy exists
between public sector and private sector collective bargaining,
thus distinguishing the Ellis' chargeability test, (3) and that "in
the public sector the line may be somewhat hazier" between what is
a chargeable versus nonchargeable expenditure. Abood, 431 U.S. at
236. The WERC also asserts that a broad definition of
chargeability is "essential" as public employees are often
dependent on politically controlled sources of public funding, and
because many public-sector labor issues are nonbargainable. It
concludes that chargeability of political expenses should be
liberally construed so as to allow public sector bargaining units
access to their employer -- the legislature.

The unions do not seek review of the WERC's determination on the
chargeability of these categories except to say that we should
defer to the WERC because the chargeability of these categories is
"within the expertise of the WERC due to extensive knowledge in the
area of public sector exclusive bargaining representation and
contract administration."

VIII. Collection of Fair-Share Fee Equal to Full Union Dues from
Nonmember Fee Payor. Section 111.70(2) and (1)(f), Stats.,
requires that nonunion employees pay their "proportionate share" of
collective bargaining costs measured by the "amount of dues
uniformly required of all members." The WERC held that Hudson, sec.
111.70(1)(f), and sec. 111.70(2) "permit a union to collect and
spend a fair-share fee equal to regular dues from the nonmember
employes (sic] it represents as the exclusive collecting bargaining
representative if those nonmembers have not made their dissent
known to the union in the manner in time the union may lawfully
require." The circuit court affirmed, holding that "[n]either
111.70 nor Browne restrict the fair-share fee deduction to an
amount less than full union dues." The WERC and circuit court also
relied on a proposed amendment to the fair-share statute that was
never adopted that would have limited, without objection from
nonunion employees, the amounts a union could deduct from fair-share employees.

The nonunion employees argue that the failure of a legislature to
explicitly state a restriction does not, by itself, establish that
the restriction was not imposed by the more general, already-enacted language. The
nonunion employees also argue that Browne
held that the Municipal Employment Relations Act implicitly limited
the fair-share fee that could be collected. See id., 83 Wis.2d at
330-334, 265 N.W.2d 565-567. The nonunion employees also argue
that under the fair-share statute all nonunion employees need pay
only the "proportionate share," sec. 111.70(1)(f), and that the
function of an objection is to challenge the unions' calculation of
the fee, not to trigger the statute's prescription.

The WERC argues a nonunion member, fair-share payor must
affirmatively object to a union's political expenditures before the
"proportionate share" limitation is required. The WERC relies on
the Supreme Court's statement that "the objective must be to devise
a way of preventing compulsory subsidization of ideological
activity by employees who object thereto .... Abood, 431
U.S. at
237 (emphasis added), quoted in Hudson, 475 U.S. at 302.

The unions did not address this issue separately but presumably
rely on their arguments supporting the applicability of the
arbitration decision to "challengers" -- that nonunion fair-share
payors must affirmatively object to the collection of fair-share
fees equal to full union dues.

IX. Additional Challenges to Union Procedures Approved by the WERC
and Circuit Court. The WERC and circuit court concluded that the
unions' post-Hudson procedures did not fully meet the
constitutional requirements for the collection of fair-share fees.
The nonunion employees also allege that four features of the
unions' procedures that were approved are also unconstitutional and
fail to "minimize the infringement" on their First Amendment
rights. Hudson, 475 U.S. at 303.

A. Adequacy of the Advance Disclosure. In Hudson, the United
States Supreme Court declared:

Basic considerations of fairness, as well as concern for the
First Amendment rights at stake, also dictate that the potential
objectors be given sufficient information to gauge the propriety of
the union's fee. Leaving the nonunion employees in the dark about
the source of the figure for the agency fee -- and requiring them
to object in order to receive information -- does not adequately
protect the careful distinctions drawn in Abood.

Id. at 306. The Court, however, also noted:

We continue to recognize that there are practical reasons why
"[a]bsolute precision" in the calculation of the charge to
nonmembers cannot be "expected or required." ... The Union need
not provide nonmembers with an exhaustive and detailed list of all
its expenditures, but adequate disclosure surely would include the
major categories of expenses, as well as verification by an
independent auditor.

1. Calculation of the Fair-Share Fee Not Audited. The
breakdown of union expenses as chargeable or nonchargeable in the
fair-share fee calculations was not verified by an independent
audit. The WERC and circuit court concluded that an independent
audit was unnecessary as long as the unions escrowed 100% of the
fair-share deductions while challenges were pending before the
impartial decision-maker.

The nonunion employees argue this is contrary to Hudson, which held
that 100% escrow of the fair-share deduction was an inadequate
remedy because the union failed to provide an "adequate
justification" of the deduction. Id., 475 U.S. at 309. The
nonunion employees contend that "adequate disclosure surely would
include the major categories of expenses, as well as verification
by an independent auditor." Id., 475 U.S. at 307 n.18. Although
Hudson stated than an independent audit of the expenditures might
relieve the imposition of a 100% requirement, (4) the nonunion
employees argue that the 100% escrow requirement does not remove
the requirement that a deduction must be "appropriately justified."
The nonunion employees also argue that verification would improve
the quality and quantity of information, and thus allow employees
to make more informed decisions on whether to object. This, they
submit, would eliminate unnecessary challenges.

The WERC argues that the role of the independent auditor should be
restricted to a traditional accounting function, i.e., how the
unions spend their funds. The WERC argues that the role of the
auditor should not be expanded to include making legal judgments
about the characterization of expenditures that might be charged to
an objector.

The unions argue that the impartial arbitrator is the proper person
to decide chargeability of expenditures, but only after the unions'
calculation of the fair-share fee has been challenged.

2. Sufficiency of the AFSCME International's Disclosures. The
WERC concluded that AFSCME International's financial information
was "the minimum of what is required." The disclosure lists
categories of chargeable and nonchargeable activities, but without
corresponding amounts. A schedule, however, lists eighteen
different general line-item expenses.

The nonunion employees contend that most items in AFSCME's
disclosures are "neither explained nor sub-divided sufficiently."
The nonunion employees also argue that this violates Hudson since
the purpose of notice is not to require employees to object in
order to get the information that they should receive as a matter
of right.

In addition to arguing that Hudson does not require a union's fair-share
procedures be "least restrictive," the WERC submits that the
courts should defer to its conclusion that the financial disclosure
was satisfactory.

The unions argue that Hudson only requires "adequate explanation of
the basis for the fee," id., 475 U.S. at 310, and that it does not
have to provide the nonunion employees with an "exhaustive and
detailed list of all its expenditures," id., 475 U.S. at 307 n.18.

B. Unions' Objection Scheme and Protection of Employees'
Rights.Hudson requires that unions provide agency shop procedures that
minimize the impingement of nonunion employees' First Amendment
rights, and "that facilitate a nonunion employee's ability to
protect his rights." Id., 475 U.S. at 307-308 n.20.

1. Objection Requirements as Burdensome. The WERC and circuit
court determined that nonunion employees could be charged a fee
equal to dues unless they object annually within 30 days after the
date of the notice.

The nonunion employees argue the annual objection requirement and
the limited period within which objections and challenge must be
made are impermissible under both the Municipal Employment
Relations Act and the First Amendment. They argue that the
Municipal Employment Relations Act limits collection for all
nonunion employees to an amount less than the amount of dues, and,
thus, an objection cannot be a condition to their paying only their
"fair share." See sec. 111.70(1)(f) (Nonunion employees "are
required to pay their proportionate share of the cost of the
collective bargaining process and contract administration measured
by the amount of dues uniformly required of all members."). They
also argue that the requirement for annual objection renewal, and
the 30-day limit on the time for making an objection and challenge,
contravene Hudson's "least restrictive means" standard. They
contend that the time limitation is unconstitutional because the
nonmembers cannot know on what the union spent fair-share fees
until the end of the year.

The WERC argues that the annual renewal requirement for
objection/challenges to union expenditures is reasonable, since
Hudson acknowledged that nonunion employees would be making
objections based upon inexact information. See Hudson, 475 U.S. at
307 n.18 ("[T]he union cannot be faulted for calculating its fee on
the basis of its expenses during the preceding year.").

The unions reply to the nonunion employees' argument that the
objection requirements are unduly burdensome by noting "[T]he
nonmember's 'burden' is simply the obligation to make his objection
known." Hudson, 475 U.S. at 306 n.16.

2. Applicability of an Arbitration to only "Challengers" under the
Unions' Procedures. The WERC and the circuit court held that the
unions may restrict the benefit of an arbitration to those nonunion
employees who dissent and challenge the unions' computations ("the
challengers" under the unions' notice and procedures), as opposed
to those fairshare fee payors who dissent but agree to accept the
unions' computations ("objectors"). All other nonunion employees,
including "objectors," could continue to be charged a fee equal to
dues if the nonunion fair-share payor failed to timely challenge
the unions' collection of full dues. The WERC also justified
limiting the effect of the arbitration by reasoning that the
"objectors" would have made a "knowing and voluntary waiver" of the
right to "challenge."

The nonunion employees argue that the Municipal Employment
Relations Act statutorily limits what may be collected from all
nonunion employees to their proportionate share of collective
bargaining costs. They also argue that waiver of arbitration
should occur only if a nonunion employee explicitly states that he
or she wishes to pay full dues or the fee calculated by the unions.

The WERC and the unions argue that nonunion employees must
affirmatively make their dissent known to the union and that
dissent may not be presumed. See Hudson, 475 U.S. at 306 ("the
nonunion employee has the burden of raising an objection"); Abood,
431 U.S. at 238. The WERC contends that it is a "long-standing
constitutional principle that a non-union member must object in
order to trigger the protections of fair share fee procedures
doctrine." The unions claim that Hudson establish[es] this
procedure as the way that the constitution demands for settlement
of disputes involving fair share fees."

X. Employer Collection of Fair-Share Fees Absent Full Compliance
with Hudson's Procedural Safeguards. The WERC found that

the employers did not provide or require the Hudson safeguards
prior to the deduction of compulsory fees from nonunion employees'
wages. Yet, the WERC and the circuit court held that, despite its
findings that the unions committed a prohibited practice for
noncompliance with Hudson, the employers did not commit
any
prohibited practices by deducting, over nonmembers' objections, and
giving the unions fair-share fees equal to dues. The WERC
concluded, and the circuit court affirmed, that: "[T]here is no
evidence or argument that the [employers] have taken any action
other than to comply with the terms of a provision of their
respective collective bargaining agreements . . . , as required by
law, by acting as a conduit for the Respondent Unions."

The nonunion employees argue that an employer "acting as a conduit"
sustains liability under Wis. Stat. sec. 111.70(3)(a)1, Browne,
and Hudson. Sec. 111.70(3)(a)1, Stats., provides: "It is a
prohibited practice for a municipal employer individually or in
concert with others... [t]o interfere with, restrain or coerce
municipal employees in the exercise of their rights guaranteed in
sub. (2)."

In Browne, 83 Wis.2d at 334, 265 N.W.2d at 567, the Wisconsin
Supreme Court quoted sec. 111.70(3)(a)1, Stats., but did not
specifically discuss employer obligations. A footnote to the
court's discussion, however, states in pertinent part:
"Moreover, we interpret the Wisconsin Statutes as providing that it
is an unfair labor practice to require a municipal employee to pay
for anything more than their [sic] proportionate share of the cost
of collective bargaining and contract administration." Id., 83
Wis.2d at 334-335 n.9, 265 N.W.2d at 567 n.9. The nonunion
employees argue that Browne, read in context, holds that any
employer commits a prohibited practice by deducting a fee that will
in part be used by a union for nonchargeable purposes.

The nonunion employees also argue that Hudson supports public
employer "conduit" liability. There, the Supreme Court rejected
the unions' suggestion of sufficient available ordinary judicial
remedies, and noted: "Since the agency shop is a significant
impingement on First Amendment rights,' the government and union
have a responsibility to provide procedures that minimize that
impingement and that facilitate a nonunion employee's ability to
protect his rights." Hudson, 475 U.S. at 307-308 n.20 (quoting
Ellis, 466 U.S. at 455). The nonunion employees maintain that
subsequent case law has consistently read Hudson to impose a duty
on employers.

The WERC's only argument in this regard is that the nonunion
employees' argument should be rejected in deference to its
policymaking function.

XI. Third-Party Independently Controlled Escrow Accounts.
District Council 48 established an "escrow" account for 100% of the
fair-share fees paid by challengers, minus the rebate paid to the
challengers by the union. The WERC determined that the District
Council 48's account, "while interest-bearing and adequately
verifiable through bank statements, does not constitute a true
'escrow,' because it does not remove the fund from Respondent
District Council 48's control."

The unions argue that there were no findings that the escrow
account was a subterfuge for the unions' use of the fee, nor was
there any finding that the fees were not being deposited or were
incapable of being independently verified. The unions also argue
that escrow of funds in a trust account is burdensome, expensive,
and unnecessary.

The WERC and the nonunion employees argue generally accepted
meaning and precedent support the WERC's ruling that the escrow
account must be independently control-led by a neutral third party.
They contend that a finding of "subterfuge" was not required, but
only that the unions' scheme did "not avoid the risk that
dissenters' funds may be used temporarily for an improper purpose."
Hudson, 475 U.S. at 305. (emphasis added). The nonunion employees
argue that such a risk is present, based on the Executive Director
of Council 48's testimony that the terms of the Unions' savings
accounts for the dissenters' fees require the bank to release the
funds to the council upon its unilateral demand.

XII. Alternative Remedies Urged by Nonunion Employees. The
WERC concluded that the unions committed prohibited practices by
deducting fair-share fees in the absence of all of Hudson's
procedural safeguards. The only remedy ordered for the period
beginning January 1, 1983, however, was the escrow of the fees
pending the establishment, and WERC's approval, of revised
procedures and an impartial determination of the portion that
should be refunded as nonchargeable. The WERC denied restitution,
concluding that the unions were entitled to the costs of exclusive
representation and, therefore, full restitution would "result in a
'windfall' to Complainants and would be the equivalent of awarding
'punitive damages' against the Respondent Unions." The WERC also
denied the nonunion employees' request for a cease-and-desist order
because it believed that the unions "made a substantial and good
faith effort to satisfy the requirements of Hudson after that
decision was published."

The nonunion employees assert this escrow remedy is "woefully
inadequate." They argue that the WERC should have ordered
restitution of compulsory fees collected for improper purposes, and
petitioned for a cease-and-desist order. The nonunion employees
maintain that under Hudson, a bargaining representative is entitled
to nothing, not even bargaining costs, from a nonunion member
unless it first implements the necessary procedural safeguards.
See id., 475 U.S. at 305-306, 310. The employees argue the unions
violate the rights of all nonunion members in the unit it
represents, not just those who have sued, when it fails to fully
comply with Hudson's procedural safeguards. See Hudson,
475 U.S.
at 306 ("potential objectors" must be given sufficient financial
disclosure).

The nonunion employees also argue that the unions did not
substantially comply with Hudson. They allege the unions'
post-Hudson procedures provided neither "an adequate explanation of the
basis for the fee" nor "a reasonably prompt opportunity to
challenge the amount of the fee before an impartial decisionmaker,"
Hudson, 475 U.S. at 310, because the notice provided no information
as to the local unions and was designed to discourage challenges.

The WERC did not specifically address this issue. The unions,
however, argue that the relief sought by the nonunion employees is
punitive and contrary to Hudson. They argue that the WERC has
erred by extending the 100% escrow to people who have not objected,
challenged, or otherwise made their dissent known to the unions.

CONCLUSION

We find no Wisconsin case law that addresses the issues raised in
this appeal. All of these issues turn on policy analyses under
sec. 111.70, Stats., Hudson, Abood, Ellis,
and Browne. They
require balancing the First Amendment rights of nonunion employees,
the unions' right to receive compensation for the statutorily-mandated services it renders as
the exclusive representation of all
employees in the bargaining unit it represents, and the state's
interest in stable and peaceful labor relations, as well as in
protecting the rights of its citizens. The resolution of these
issues extends beyond the limited, error-correcting function of
this court. These issues are of statewide concern and will no
doubt continue to arise. Therefore, we respectfully certify them
to the Wisconsin Supreme Court for its review and determination,
pursuant to Rule 809.61, Stats.

3. "[T]he test must be whether the challenged
expenditures are
necessarily or reasonably incurred for the purpose of performing
the duties of an exclusive representative of the employees in
dealing with the employer on labor-management issues." Ellis, 466
U.S. at 448.

4. If "the original disclosure by the Union had included
a
certified public accountant's verified breakdown of expenditures,
including some categories that no dissenter could reasonably
challenge, there would be no reason to escrow the portion of the
nonmember's fees that would be represented by those categories."
Hudson, 475 U.S. at 310.